Answer Happy

1. Calculating inflation using a simple price index Consider a fictional price index, the College Student Price Index (CSPI), based on a typical college student's annual purchases. Suppose the following table shows information on the market basket for the CSPI and the prices of each of the goods in 2017, 2018, and 2019.. The cost of each item in the basket and the total cost of the basket are shown for 2017. Perform these same calculations for 2018 and 2019, and enter the results in the following table. Notebooks Calculators Large coffees Energy drinks Textbooks Total cost Price index Quantity in Basket 15 1 250 50 10 Price (Dollars) 2 70 2 2 120 Suppose the base year for this price index is 2017. 2017 Between 2017 and 2018, the CSPI increased by Cost Price (Dollars) (Dollars) 30 5 70 100 500 2 100 1,200 1,900 100 4 150 2018 Cost (Dollars) In the last row of the table, calculate and enter the value of the CSPI for the remaining years. Price (Dollars) 8 130 2 6 180 %. Between 2018 and 2019, the CSPI increased by 2019 Cost (Dollars)

Calculators Large coffees Energy drinks Textbooks Total cost Price index 1 250 50 10 70 2 2 120 Suppose the base year for this price index is 2017. Between 2017 and 2018, the CSPI increased by 70 500 100 1,200 1,900 100 100 2 4 150 In the last row of the table, calculate and enter the value of the CSPI for the remaining years. 130 2 6 180 %. Between 2018 and 2019, the CSPI Increased by Professors required each student to buy 15 notebooks, regardless of the price. A new mobile device for personal computing became available for purchase. Which of the following, if true, would illustrate why price indexes such as the CSPI might overstate inflation in the cost of going to college? Check all that apply. Energy drinks became increasingly popular on college campuses between 2017 and 2019 due to significant improvements in flavor, but this quality change is hard to measure. As the price of calculators rose, fewer students decided to buy them, opting instead to use the free calculators in their cell phones or on their computers.